Industry Products

Bloomberg Customers

This site uses cookies. By continuing to browse the site you are agreeing to our use of cookies.

A cookie is a piece of data stored by your browser or device that helps websites like this one recognize return visitors. We use cookies to give you the best experience on BNA.com. Some cookies are also necessary for the technical operation of our website. If you continue browsing, you agree to this site’s use of cookies.

Your HR and Payroll compliance and policy solution! Comply with federal, state, and international laws, find answers to your most challenging questions, get timely updates with email alerts, and more with our suite of products.

Switzerland’s lack of regulatory oversight for lawyers, as well as loopholes that
allow them to ignore due-diligence rules, came under intense scrutiny at a European
Parliament hearing probing Switzerland’s role in the year-old Panama Papers revelations.

At the same time, leading French banks Societe General and BNP Paribas faced criticism
for the roles their Luxembourg subsidiaries played as intermediaries in establishing
some of the more than 200,000 shell companies revealed by the Panama Papers leaks.

With leading Swiss banks UBS AG and Credit Suisse Group AG no-shows at the hearing,
European parliamentarians were told Switzerland’s lack of compliance with Financial
Action Task Force regulations covering know-your-client
(KYC) rules for company ownership is the most important reason the country had more
links to Panama Papers shell companies than any other European country.

“A Swiss lawyer does not have to abide by due diligence rules when it acts as an intermediary
in setting up a company that has directors as nominal beneficiaries owners of a company,”
Swiss journalist Oliver Zihlmann told the panel. Probes into the Panama Papers’ leaked
documents revealed that 90 percent of Swiss lawyers used this loophole when they incorporated
shell companies with Mossack Fonseca & Co., he said.

Loophole Still Exists

“This is a loophole that still exits today,” said Zihlmann. He also noted that many
of the shell companies Swiss lawyers helped set up didn’t use Swiss banks. Had Swiss
banks been involved, they would have been required to employ KYC laws that would have
required stricter scrutiny of the beneficial owners.

Rebutting Zihlmann’s accusations was Geneva-based criminal prosecutor Jean-Bernard
Schmid, who downplayed the role of Swiss lawyers in the Panama Papers and insisted
legal constraints make it difficult to pursue illegal money laundering cases with
Swiss links to foreign countries.

“Most of the facts revealed by the Panama Papers were known to us,” Schmid said. “When
relevant, investigations had already been opened. The barriers we face in pursuing
these investigations include technical difficulties when coordinating different judicial
systems and cross-border investigations. This includes difficulties in identifying
beneficial owners.”

Laws, Intermediaries

Peter Lutz, president of the Swiss Bar Association’s and Swiss Notary Association’s
Self-Regulatory Organization dealing with money laundering, insisted Switzerland has
robust criminal laws against money laundering, to which the legal profession must
comply.

‘This includes special laws applicable to lawyers acting as intermediaries,”
Lutz said. He also said Swiss lawyers are no more responsible for aiding and abetting
offshore companies than internet service providers and postal carriers.

Following his testimony, Lutz was consistently challenged by parliamentarians who
insisted that despite Swiss laws, the legal profession in Switzerland lacks oversight
to ensure they are being applied.

“The lack of oversight of Swiss lawyers is a glaring problem,” said Paul Tang, a Dutch
parliamentarian from the Socialists and Democrats political group.

During the the hearing, Parliament members criticized the absence of UBS and Credit
Suisse. Some insisted the two banks should lose their right to enter the European
Parliament to engage in lobbying activities.

Credit Suisse Letter

Credit Suisse insisted in a letter sent to the committee—a copy of which was obtained
by Bloomberg BNA—that when it comes to private company accounts “where the account
holder is not the beneficial owner of the assets, evidence has to be provided with
regard to the identity of third-party beneficial owners holding interests in such
an account above minimum regulatory thresholds, subject to applicable anti-money laundering
laws.”

Speaking earlier in the hearing, Patrick Suet, chairman of the Luxembourg-based Societe
General Bank & Trust, told the European Parliament committee the bank has closed all
accounts with links to Mossack Fonseca. “Companies that had been set up at the request
of our customers no longer exist or are no longer administered by us,” Suet said.

BNP Paribas official Sylvie David-Chino, who heads the financial institution’s global
compliance division, testified that the largest bank in France doesn’t advise its
clients on the creation or administration of offshore companies. “We have ceased activity
related to this activity,” David-Chino said.

All Bloomberg BNA treatises are available on standing order, which ensures you will always receive the most current edition of the book or supplement of the title you have ordered from Bloomberg BNA’s book division. As soon as a new supplement or edition is published (usually annually) for a title you’ve previously purchased and requested to be placed on standing order, we’ll ship it to you to review for 30 days without any obligation. During this period, you can either (a) honor the invoice and receive a 5% discount (in addition to any other discounts you may qualify for) off the then-current price of the update, plus shipping and handling or (b) return the book(s), in which case, your invoice will be cancelled upon receipt of the book(s). Call us for a prepaid UPS label for your return. It’s as simple and easy as that. Most importantly, standing orders mean you will never have to worry about the timeliness of the information you’re relying on. And, you may discontinue standing orders at any time by contacting us at 1.800.960.1220 or by sending an email to books@bna.com.

Put me on standing order at a 5% discount off list price of all future updates, in addition to any other discounts I may quality for. (Returnable within 30 days.)

Notify me when updates are available (No standing order will be created).

This Bloomberg BNA report is available on standing order, which ensures you will all receive the latest edition. This report is updated annually and we will send you the latest edition once it has been published. By signing up for standing order you will never have to worry about the timeliness of the information you need. And, you may discontinue standing orders at any time by contacting us at 1.800.372.1033, option 5, or by sending us an email to research@bna.com.

Put me on standing order

Notify me when new releases are available (no standing order will be created)